tv Nightly Business Report PBS November 9, 2009 6:30pm-7:00pm EST
>> susie: stocks hit fre highs for the ar as the dow jumps over 200 points. what does this run-up on wal street mean for vestors and the onomy? we get answers from economist and a rket pro. >> jef some are calling it the case of the century fopatent law as theupreme court takes on abstrt business innovations. issue, where to draw the li when patenting a busins concept or stregy. kraft goes hostile with its $1 billion bid for dbury. but that'sot sweet enough for the british chocolate make then, meethe popsy-cake. it a cupcake on a stick combination thought up bthis teen ientor. coming up, a look at h her business plafared in a nation competition.
this program is de possible contributions to your pbs station from viers like you. ank you. captioni sponsored by wpbt >> susie: good eveni everyone. a big ock market rally today as the dow surged to a n high for e year. the blue cps rose 203-points wi 29 of the dow's 30 components in the gree except for kraffoods. investors were eouraged to buy word that policymakers from the world's 20 largest nions agre over the weekend to coinue providing stimulus to the global economy. gold prices al hit a record highut the u.s. dollar fell to a 15-month low against theuro. so whado all these developments mean r investors and e economy? joining now, drew matus, u.s. economist at b-of-a rrill lynch global research and sct
wren, senior equity rategist at wellsargo advisors. bell come to nightly business report. >> thanks for having u >> hi, susie. >> scott, l me begin with you. what's behind the ray and will it continue? >>. >> susie, ihink overal rally has beenuilt on number within on earngs. we've had two blout earningsuarters in a row. i thin earnings estimates are o low. i don't think 's any surpse at all at the g-20 is ing to leave a lo of stimulu measures in place. i ink a lot of our trang partners were starti to talk tgh about interest rates an liquidity and thingsike that. but in the end i think it's -- one cod expect th hey, these tim lus measures areoing to ben place for a whe. interest rates are gointo remain very low for while. so all of those things have helped to drive the market higher >> drew, i was talking t somebody today and heaid thathis is a liquidity bubble massacr aiding as a recovery. ifouull ttimulus out
there is no recovery. how do you respond. >> i wouldn't y there is no recover b when the fed is deciding how to raise interest rates they wi look at the lens through all the aal liquidity th adding and asking that same question. that is one of the reaso bank of america, merrill lyncdoesn't expect them to move unt 2011. let me go back to something you id about earnin are coming in better than people are excting. are compani really doi better or are they is it just a matter of them having cut costs and that'shy we're seeing se growth? susi, we get questions abouthe revenue growth type situation a the time. and really if u think about it, at this point of the cycle when are you coming outf the btom, you know cpanies, the way that earnings improve are alys because of cost-cutting. venue growth is later. and i think it's going to be no different in is rticular recovery probably with we have seentially earnings are tting better.
sequentially earnings are goingp but o a year-over-year bis we're going have to it a littl while. but cost-cutting is always w earnings improve of the bottom. >> should webe concerned that the dollar is hitng these lows and stocks are going up? is that aood or bad thing for companies d for the markets. >> well, the dollar is often en as some sort of view o the heth of the u. economy. in some ways it might be krk but you have to remember that the s& 500 more closely mirrors the global queion rather than the u.s. enomy. and so the dollar going do actuallys somewhat helpful for those compies. and as we look ahead too we also have to remember tha a weaker dlar means better u.s. exports. more exports because they are chear and that will be helpful as well. >> and drew, let me also ask you this. a lot of pele are looking at the stk market rally. they are satching their heads cause they alsosaw that unployment is at 10.2%. there a dconnect between what's goi on in the economynd what is going on in the market >> no, there are lags.
and the lack in the unemployment rate is a wellnown thing so about two quarters after the economy lags the unemployme rate will speak and about o quarters after that you could start worryi about inflation. but you know if youust kind of remove the ls from e equation it just doesn't work therere always lags. there ll always belags. and so i think what we are seeing is perfect normal. >> scott wt do you say to that, abt this disnnect. i'm sure a lot of your clients are asking you this. >> they finitely are. and i've bee doing a bunch of client events he lately, susie. and that is certain one of the big questions on their mind. as drew id, younow, employment is always a lagging inditor. i thk that rht now we' in that part of the cycle where productivitgrowth is high. compies are trying to do asuch as they can, produce as much as they can with wer inputs. in otherords, fewer employees. so they don't want to hire people until they absolutely haveo. i think this particular cle, employment's probably going to ceback slower than it has at least for the last few cycles. >> all right, gentlemen.
ank you very much for come on the program and anazing thiswe really appreciate it. >> thank y. >> myuests were drew matus >> susie: my guests tonigh drew matus of b--a merrill lynch obal research and scott wren of wells fargo adsors. >> jeff: the supreme cou today seemed skeical of the idea that n ways of doing business should be grand the same patent proteions as new machines and technical breakthroughs. that was thessue before the courtoday in the case of bilski v. kappos. as darren geh reports, it cod set the standard for patent protectionsn an increasinglynowledge driven onomy. >> reporter: the two inventors bernard lski and rand warsaw are trying to patent a w to hedge againsthe risk of rising energy bills. michael kes represented the inventors beforehe high court, arguing their wo is a product of a knowledge economy. >> the real reason people e getting patents is because tre has just been huge surge in invation. in financial enginring and operations research. thingsn that area that now should beligible for
pateing. >>eporter: under the law, no one n patent an abstract idea and chief justice john rerts asked whetherisk management wouldn't fall unr that category. the only psical step in the process roberts id was picking up the phone to buy and sell commodities. justice ru bader ginsburg pointeto other patents granted for ways to ck a jury or avoid taxes. the court wantedo know where to draw the linen these kinds of biness methods which don't involve machines or chnology. kes argued as long as the busiss method is new and not obvious, two trational stdards for patents, it should be approved. law professor pame samuelson filed a brief with t court on behalf of an online civil liberties oup arguing such patents provide littleenefit to society >> it's st difficult to do searches a impose huge amount of cost on socty if everybody whdecides they are going to engage in a hedging strategyas too check the patent office record to see whether orot
they have to clear rights. >> reporter: law pfessor kevin colls says the court today showed it clearly wants rein in the patt system, but isn't sure how hard to pull. either the case cod go from a relatively narrow exclusiothat affects onlyusiness methods patents to quite a bad exclusion fromatentability thatould affect the patentabity of a number of software and biotech inventis. >> rorter: which is why companies like google and microsoft fid briefs in this case and are watchinit closely. a desion is expected next spring. darrenersh, "nightly business report", washington. >> jeff: thereas just one decision to make on wa street today y, buy, buy. e dow rose 150 in the first half of the sessio the g-20 meeting mentioned b suzy provided thfuel. e nasdaq saw gains from news th global shipments of micro processor chs hit an alltime high for a sine quarter, all of that oke to resurgent nfidence on wall street, wit the dow ending.
>> jeff: also in the bond maet today, $ billion in 3-year nos were successfully auctioned off,n the first leg of thiweek's massive quarterly refuing. traders said demd for the notes s "stunning." investorhave been gobbling up government debt, despite extremely low yiel. bu as suzanne pratt reports there e other places to look for investment income ile the economy covers. >> reporte interest rates are
at historic lows. those w rates flow through to everything from bank aounts to bondand that means investors searchg for yield are having a tough time. sohat are the choices? if you are risk averse, u can get a 2-year cd for more tn 2%. experts recommd avoiding longer-term cds in favor o waiting for rates tolimb higher. money market aounts currently y less than 2%. they're more luid than cds but only thoserom chartered banks are fdic insured -year treasury bonds pay abo 3.5%. but, unless you'relanning to hold tm until maturity, experts say th're a gamble because if inflationeats up, treasuriesill fall in price and in value. th brings us to ti. the inflation protectetwist on convential treasuries. financiaplanner stacy francis likes them f the next few yes. >> with the huge stilus package that we've seeover the last yea year and a half. that eventually y cause some inflion.
your best protection against inflation when it mes to bonds is ts. >>eporter: and, then there are municipal bonds. they can be attractive to investors in high tastates. but, ilation risk plagues munis, too. expertadvise sticking with short to medium term maturies to reduce th risk. but don't forgetquities. particularly dividd paying stocks. ile it's harder day to pick goodnes. experts say the are solid chois yielding as much as 4%. standard and poos posts a list of companies on its webse that it says genete enough cash to pay dividends. still, s&p's howard silveratt says there's new reality even in the dividend world. if you're looking for 5% o6% return you're not going to g it. >> at least if you dget it you're notoing to be able to sleep. you're goi to have to set your sights a lot lower and be aling with the 2%, 3% and 4% rae and accept some risk becausthere is risk everywhere
>> reporr: it is widely esumed that interest rates willemain very low at least for the next year. that meansncome investors are unlikely to find yields noh of 4%. without venturing in riskier products. suzannpratt, "nightly business report", new york. >> sie: there's a split brewing at the american mecal associatn over the health care reformill working its way through congress. the doctors oup supported the measurthat passed in the house this weekend. but now some ama members wt to withdr their support, saying the bill hasteep medicare cuts and doesn't reform malpracti. this latest devepment comes as e senate continues to work o its version of t healthcare bill senate majority leaderarry reid wan a public option to be included. but that coulde a roadblock in tting the senate to pass the measure.
>> jeff: call it the chocote wars. cadbury plc said nthanks again todato a buyout bid from kraft foods. the ker of oreo cookies went hostiltoday with its $16.3 billion bid for the uk-based chocate and chewing gum maker. it's theame price kraft fered in september cadbury's ceo says kraft's oer esn't come remotely close to reflecting his company true value. late today, kraft filed a pry statement sayi it could raise s bid for cadbury. britain'takeover panel had ordered kraft to either ke a biby today or be barred from making another r at cadbury for x months. >> susie: meanwhile neral electric is close to sellingts nbc universal it. published reports sathe conglomerate and comst have agre to value the entertainment vision at about 0-billion.
the fis also want to create a joint venture to managnbc. but je there's a wild card in the negotiations: vivei. thfrench conglomerate owns 20% of nbc univeal. jeff: susie, the ge comcast deal is dependent vivendi selling s stake in nbc unersal. now lets see what was lling on wall strt as we take a look at our stocks in the news tight.
ar corp emerged from bankruptcy today with a biion dollars in ch and a backlog of new orders. e maker of auto seating and electronics cut i debt by almo $3 billion during its four-month stay in bankrtcy. it also lined up over billion in new business th contracts runng through 2012. lear issued new stk today, and expects to begin regul trading here at e nyse later this week. >> jeff: the fraudrial of two former bear earns hedge fund managers went a jury today. it'she first high-profile fraud case tied to subprime mortgage bked securities and the financial crisis. prosecutors claim ralph ciof and matthew tannin ld to inveors about the health of their funds. those fus failed in mid-2007 costing investors $1.2 blion. both have plded not guilty.
here's a look at what' happening tomorr. the weekly reporon chain store sas is out. and quarterly results fr beazer homes, maenform brands, peboys and tyco international. jeff: while we've all heard entreneurial success stories - like apple's steve js and sam walton owal-mart,you may not have heard of 19 year old jessica cervantes but you wi. she's part of e new documenty "ten-nine-eight shoot for the moon"
itocuses on a high school business plan competitn that had studen competing for seed money. the filmollows some of the 24,000 teens through the competition, as they pch their businesslans to investment professionals. jessica developed a new od product: popsykes. d this is jessica cervantes today. hepopsycakes, think "cupcake on a stick" are now the research andevelopment phase this commercial kitchen. she and r advisors are still tinkering with the formula, presentaon and packaging. she has become a veteran a promoting her pruct, compared toer early efforts shown in the film. i'm noa business major. i didn't always know what i was doing. sometimes my numrs didn't add up i didn't know my materials costs. didn't know what that was. so it took awhe for this to go smoothly. and there are stilsome obstacles ong the way and
're trying to deal with that >> jeff: the kids in the documentary know pnty about obacles, with many facing chlenges in their personal and family lives, says alice hn, of theational foundation for teaching entrepreneurshi e group, called 'nifty' for short, organized t business- plan competition for hh- hools students in 21 states. >>hey take that business opportunity and connect to the businesslan. th they can take that plan to academics, to mathto research, to writing and as anutcome of that, ey become more connected to their academics and the futures. jeff: in the documentary, macaleharlis came up with a protective visor. the kind runningacks wear in footll, which darkens or lightens in response to conditions on the fid. harlis is now a chistry major in clege. i was inired. and i really wanted too it. ani knew it was something that would really be inemand on the football field. cause i was a football playe at the time.
so i would throw the ia at my fellow pyers, and they would say "yeah, that'd be good" >> jef and remember jessica cervantes? r business plan r popsycakes won all. she's using her winnings to launch her businesand get an educatn. >> jef the documentary "ten-9- eight" debuts in theats nationwide thiweek. and tonight's mmentator coacheteen entrepreneurs and she says teens make natul business leade. she'shonika proctor. >> whileentoring teens, i began seng their determinatn, power and poteial as they were trying to put business ideas tether. this is when i came to reali thatntrepreneurship was not a course oa class, but a level of csciousness that many teens had, but were unawarof. when given encouragement a a clr and open space they would begin to see their social consciousness and reection of others around them as trts of being teen entrepreneur
they are creative, onionated, and te to challenge authority. they do not segregate work, learning and play,hich through the es of a parent can be misinterpreted as being unfocused. teens who are seen as unmanageable by thr parents or teacrs are the ones actually displaying early signsf innovation, felessness and leadship. if y have seen these personality traits in e teens in your life, maybit is time you resess your perception of their potential. i have workewith teens that fit this profile who he been able to overcome lifchallenges and negative labels beat the odds in school, life and business. they have wrten and published books, designed and manufacted oducts and been featured on national televisio so i leave you with this thought: te your teens' aspitions seriously. although they may not coorm to the world aroundhem, perhaps this is exactly the trait at will allow them to cate their own world a world weall a busine.
>> jeff: that's nightly siness report foronday, november 9. i'm jeff yastine. goodnight everyone. and goodnight to you too sie >> susie: and u as well jeff. m susie gharib. 'll see all of you again tomorrow. "nightly business report" made possiblby: 150 yes of financial stngth and the experien of an establisheinvestment firm he come together. wachovia securities is now wells fargo advisors with financial advisors nearby and nationwide. for the adce and planning experse to help you address today's unique chaenges, we're wityou. wachovia securitieis now wells fargadvisors. together we'll gfar.